FLIR Systems Announces Second Quarter 2014 Financial Results

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| Source: FLIR Systems, Inc.

WILSONVILLE, Ore., July 24, 2014 (GLOBE NEWSWIRE) -- FLIR Systems, Inc. (Nasdaq:FLIR) today announced financial results for the second quarter ended June 30, 2014. Revenue was $369.4 million, down 5% compared to second quarter 2013 revenue of $389.3 million. Operating income in the second quarter was $59.4 million, compared to $70.3 million in the second quarter of 2013, and was impacted by $3.5 million in pretax charges related to previously-announced restructuring initiatives. Second quarter 2014 net income was $44.8 million, or $0.31 per diluted share, compared with net income of $50.2 million, or $0.35 per diluted share in the second quarter a year ago. The net after tax impact of the restructuring charges in the second quarter was approximately $2.7 million, or $0.02 per diluted share. Cash provided by operations in the second quarter was $70.6 million.

Revenue from FLIR's Surveillance segment was $105.8 million, a decrease of 28% from the second quarter results last year. The Instruments segment contributed $84 million of revenue during the second quarter, up 5% from the prior year. The OEM & Emerging Markets segment had $59 million of revenue, an increase of 21% over the prior year. Revenue from the Maritime segment was $55.2 million, and was up 1% over the second quarter of 2013. FLIR's Security segment recorded revenue of $44.7 million in the second quarter, up 30% from the prior year. The Detection segment contributed $20.7 million of revenue, a decrease of 12% from the prior year.

FLIR's backlog of firm orders for delivery within the next twelve months was approximately $548 million as of June 30, 2014, an increase of $34 million during the quarter and an increase of 12% since the beginning of 2014.

"Second quarter results were marked by double-digit growth in our commercially-oriented segments and an improved backlog overall," said Andy Teich, President and CEO of FLIR. "These positive indicators, combined with the anticipated benefit from our restructuring and realignment initiatives, give us confidence in our outlook for the second half of 2014. We are excited about our recent and upcoming product introductions and the momentum being exhibited in many parts of the business."

Revenue and Earnings Outlook for 2014

Based on financial results for the first six months of 2014 and the outlook for the remainder of the year, FLIR is reaffirming its outlook for revenue and earnings per share for the full year 2014. Management expects revenue for 2014 to be in the range of $1.45 billion to $1.55 billion and net earnings excluding restructuring charges associated with the business realignment to be in the range of $1.40 to $1.50 per diluted share.

Dividend Declaration

FLIR's Board of Directors has declared a quarterly cash dividend of $0.10 per share on FLIR common stock, payable September 5, 2014, to shareholders of record as of close of business on August 19, 2014.

Conference Call

FLIR has scheduled a conference call at 11:00 a.m. ET (8:00 a.m. PT) today to discuss its results for the quarter. A simultaneous webcast of the conference call can be accessed online from a link in the Events & Presentations section of www.FLIR.com/investor. A replay will be available after 2:00 p.m. ET (11:00 a.m. PT) at this same Internet address. Summary second quarter and historical financial data, including 2013 quarterly results for each of the new segments, can be accessed online from the Financial Info Database link at www.FLIR.com/investor.

About FLIR Systems

FLIR Systems, Inc. is a world leader in the design, manufacture, and marketing of sensor systems that enhance perception and awareness. FLIR's advanced systems and components are used for a wide variety of thermal imaging, situational awareness, and security applications, including airborne and ground-based surveillance, condition monitoring, navigation, recreation, research and development, manufacturing process control, search and rescue, drug interdiction, transportation safety, border and maritime patrol, environmental monitoring, and chemical, biological, radiological, nuclear, and explosives (CBRNE) threat detection. For more information, visit FLIR's web site at www.FLIR.com.

Forward-Looking Statements

The statements in this release by Andy Teich and the statements in the section captioned "Revenue and Earnings Outlook for 2014" above are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are based on current expectations, estimates, and projections about FLIR's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including the following: changes in demand for FLIR's products, product mix, the timing of customer orders and deliveries, the impact of competitive products and pricing, FLIR's continuing compliance with U.S. export control laws and regulations, the timely receipt of any required export licenses, constraints on supplies of critical components, excess or shortage of production capacity, the ability to manufacture and ship the products in the time period required, actual purchases under agreements, the continuing eligibility of FLIR to act as a federal contractor, the amount and availability of appropriated government procurement funds and other risks discussed from time to time in FLIR's Securities and Exchange Commission filings and reports. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made and FLIR does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release, or for changes made to this document by wire services or internet service providers.

FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts) (Unaudited)
 
  Three Months Ended Six Months Ended
  June 30, June 30,
  2014 2013 2014 2013
         
Revenue  $ 369,381  $ 389,329  $ 720,923  $ 737,912
Cost of goods sold  186,662  199,288  369,673  363,884
Gross profit  182,718  190,041  351,250  374,028
         
Operating expenses:        
Research and development  36,307  39,601  72,633  76,285
Selling, general and administrative  83,500  80,168  165,442  158,341
Restructuring expenses  3,547  --  11,361  --
Total operating expenses  123,354  119,769  249,436  234,626
         
Earnings from operations  59,364  70,272  101,814  139,402
         
Interest expense  3,629  3,767  7,337  6,664
Interest income  (272)  (274)  (536)  (465)
Other income, net  (1,070)  175  (1,269)  (589)
         
Earnings from continuing operations before income taxes  57,077  66,604  96,282  133,792
         
Income tax provision  12,319  16,446  21,630  31,998
         
Net earnings  $ 44,758  $ 50,158  $ 74,652  $ 101,794
         
Earnings per share:        
Basic  $ 0.32  $ 0.35  $ 0.53  $ 0.71
Diluted  $ 0.31  $ 0.35  $ 0.52  $ 0.70
         
Weighted average shares outstanding:        
Basic  141,574  142,085  141,255  143,350
Diluted  144,120  143,774  143,964  144,981
         
FLIR SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands) (Unaudited)
 
  June 30, December 31,
  2014 2013
ASSETS    
     
Current assets:    
Cash and cash equivalents  $ 602,073  $ 542,476
Accounts receivable, net  270,086  286,573
Inventories  350,092  344,719
Prepaid expenses and other current assets  101,684  97,574
Deferred income taxes, net  38,605  38,389
Total current assets  1,362,540  1,309,731
     
Property and equipment, net  240,023  234,041
Deferred income taxes, net  18,959  17,883
Goodwill  575,522  575,701
Intangible assets, net  147,934  154,195
Other assets  57,187  51,808
   $ 2,402,165  $ 2,343,359
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
Current liabilities:    
Accounts payable  $ 99,996  $ 85,730
Deferred revenue  24,646  28,844
Accrued payroll and related liabilities  66,191  62,069
Accrued expenses  39,745  39,316
Accrued income taxes  911  663
Other current liabilities  53,277  44,893
Current portion long-term debt  15,000  15,000
Total current liabilities  299,766  276,515
     
Long-term debt  365,257  372,528
Deferred income taxes  14,097  12,255
Accrued income taxes  20,893  19,996
Other long-term liabilities  50,411  48,685
     
Commitments and contingencies     
     
Shareholders' equity  1,651,741  1,613,380
   $ 2,402,165  $ 2,343,359
     
FLIR SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
 
  Three Months Ended Six Months Ended
  June 30,  June 30,
  2014 2013 2014 2013
         
Cash flows from operating activities:        
Net earnings   $ 44,758  $ 50,158  $ 74,652  $ 101,794
Income items not affecting cash:        
Depreciation and amortization   14,236  15,231  30,706  30,102
Deferred income taxes   (591)  (18)  915  26
Stock-based compensation arrangements   8,447  7,630  17,203  13,327
Other non-cash items   (2,109)  (2,951)  (3,599)  (577)
Changes in operating assets and liabilities  5,848  65,254  10,536  52,591
Cash provided by operating activities   70,589  135,304  130,413  197,263
         
Cash flows from investing activities:        
Additions to property and equipment, net   (16,239)  (10,643)  (25,828)  (23,291)
Business acquisitions, net of cash acquired   --  (5,165)  --  (5,165)
Other investments   --  --  --  --
Cash used by investing activities   (16,239)  (15,808)  (25,828)  (28,456)
         
Cash flows from financing activities:        
Proceeds from long term debt  --  150,000  --   150,000
Repayments of long term debt  (3,750)  --  (7,500)  (3,750)
Repurchase of common stock   (41,237)  (8,469)  (43,003)  (116,830)
Dividends paid   (14,160)  (12,802)  (28,245)  (25,909)
Proceeds from shares issued pursuant to stock-based compensation plans  20,093  2,706  28,969  3,885
Excess tax benefit of stock options exercised   3,860  236  6,559  469
Other financing activities   (264)  (946)  (14)  (966)
Cash used by financing activities   (35,458)  130,725  (43,234)  6,899
         
Effect of exchange rate changes on cash   (914)  (45)  (1,754)  (5,012)
         
Net increase (decrease) in cash and cash equivalents   17,978  250,176  59,597  170,694
Cash and cash equivalents:        
Beginning of period   584,095  246,007  542,476  321,739
End of period   $ 602,073  $ 496,183  $ 602,073  $ 492,433
         
FLIR SYSTEMS, INC.
REVENUE AND EARNINGS FROM OPERATIONS BY SEGMENT
(In thousands) (Unaudited)
 
  Three Months Ended Six Months Ended
  June 30, June 30,
  2014 2013 2014 2013
REVENUE - EXTERNAL CUSTOMERS        
Surveillance  $ 105,778  $ 147,859  $ 222,978  $ 265,847
Instruments  83,968  80,262  168,023  158,812
OEM and Emerging Markets  58,988  48,633  112,790  98,919
Maritime  55,230  54,679  107,805  105,140
Security  44,735  34,451  74,045  63,922
Detection  20,682  23,445  35,282  45,272
   $ 369,381  $ 389,329  $ 720,923  $ 737,912
         
EARNINGS (LOSS) FROM OPERATIONS        
Surveillance  $ 18,934  $ 34,076  $ 39,297  $ 67,976
Instruments  21,036  22,920  41,486  42,945
OEM and Emerging Markets  17,613  12,217  29,324  26,639
Maritime  9,714  9,374  18,544  17,481
Security  5,886  3,247  7,572  7,635
Detection  3,153  3,899  1,352  6,444
Other  (16,973)  (15,461)  (35,761)  (29,718)
   $ 59,363  $ 70,272  $ 101,814  $ 139,402
Company Contact:
Shane Harrison
+1 503.498.3547
www.flir.com